Refinitiv survey of economists shows the ECB is expected to raise the deposit
rate to 2.25% at its June 11 meeting, with a further increase possible in
September. Policymakers are weighing energy-driven inflation against a slowing
economy: May headline inflation was 3.2%, above the ECB’s 3.0% target, while
core inflation unexpectedly rose to 2.5%, suggesting the Iran conflict is
lifting prices. Recent PMIs and official data point to economic slowdown; the
conflict has now run more than three months and the Strait of Hormuz remains
severely congested, a factor that could worsen inflation and supply risks. Most
policymakers view a June hike as inevitable and say a peace deal would likely
not stop it, but economists caution that weak activity, a softening labor
market and policy rates already high versus the 2022 inflation shock argue
against aggressive further tightening.
